As critical intermediaries, financial institutions play a key role in society as they allow businesses and individuals to access essential economic opportunities through a broad range of financial products and services, including facilitating transactions, providing credit and loan services, savings accounts, and investment management. Financial institutions have therefore a responsibility to ensure their business operations, practices, policies, products and services do not cause adverse impacts on non-white stakeholders and communities of colour.
A report from the Financial Consumer Agency of Canada studying frontline practices of Canadian banks, including RBC, suggests that racialized orIndigenous bank customers are subjected to discriminatory practices.1 Compared to other customers, visible minorities and Indigenous customers were more likely recommended products that were not appropriate fortheir needs, were not presented information in a clear and simple manner and were offered optional products, such as overdraft protection and balance protection insurance.
A December 2020 academic review commissioned by the British Columbia Securities Commission estimates unbanked Canadians (no official relationship with a bank) ranged from 3%-6%, and underbanked Canadians (who rely on fringe financial institutions like payday lenders) ranged from 15%-28%.2 The review found under/unbanking has a disproportionate effect on Indigenous peoples, and that “financial access has been cited by researchers as an endemic problem in ‘low-income communities of color.”
In recent years, RBC has been subject to negative media coverage regarding how certain customers or employees have been discriminated against. This includes allegations of high-pressure sales tactics,3 racial profiling,4 and concerning allegations5 of sexism and racism6 in the workplace. Such controversies may be indicative of systemic racial equity issues in the Company’s operations. RBC’s anti-racism commitment, including current priorities, commitments and programs are insufficient to identify or address potential/ existing racial equity issues stemming from practices, policies, products and services.7 In 2020, RBC announced that it has expanded its initial $1.5 million commitment to $150 million to “invest in the futures of Black youth, generate wealth for Black communities, and redefine inclusive leadership at RBC.”8 However, there has been insufficient transparency and reporting on the progress of this commitment and how it has meaningfully advanced racial equity in its practices, policies, products and services. Racial equity issues present meaningful legal, financial, regulatory, and reputational business risks. A racial equity audit will help RBC identify, prioritize, remedy, and avoid adverse impacts on non-white stakeholders and communities of colour beyond the workplace. We urge RBC to assess its behaviour through a racial equity lens in order to obtain a complete picture of how it contributes to, and could help dismantle, systemic racism.